Daiei Inc. received approval from shareholders Wednesday to adopt a rehabilitation program mapped out by the Industrial Revitalization Corp. of Japan that features a 592.4 billion yen aid package.
The green light for the package was given at the day’s extraordinary shareholders’ meeting held in Kobe.
With the approval, the moribund supermarket chain will start implementing the program under the supervision of the the state-backed corporate bailout agency and the sponsorship of trading house Marubeni Corp. and Japanese investment fund Advantage Partners Inc.
“I offer a deep apology for having to ask for your considerable cooperation,” Daiei President Toshio Hasumi told the shareholders at the meeting.
Explaining why Daiei sought the IRCJ-led corporate rehabilitation program, he said the company could not opt for “a conventional restructuring method” because it would have been asking for financial aid for “effectively the third time.”
Several shareholders called on the firm to improve its customer service, while some shareholders from areas where Daiei is rumored to close its outlets requested that the stores be kept open.
The company’s management tendered its resignation at the extraordinary meeting, while a new board led by 49-year-old board member Yoshiaki Takahashi, who will serve as acting president, was endorsed.
The new board also included another Daiei senior official and two IRCJ managing directors — Shoichiro Onishi, 41, and Masahiro Matsuoka, 37.
All departing board members voluntarily gave up their retirement benefits.
After the shareholders’ meeting, Daiei announced that Fumiko Hayashi, 58, a former president of BMW Tokyo Corp., would become an adviser as of Friday. She is expected to be named chief executive officer when Daiei’s new leadership formally takes the helm in late May.
The 592.4 billion yen aid consists of 400.4 billion yen in debt waivers from Daiei’s 10 major creditors and 192 billion yen in a preferred-share cancellation by its three main banks — UFJ Bank, Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank.
Under the plan, Daiei is expected to close unprofitable outlets and withdraw from money-losing businesses, and as a result will report a loss of about 500 billion yen.
It also wants stockholders to approve a reduction of its capital by 99.6 percent and conducting a 10-for-1 reverse stock split of outstanding shares.
Once the new management team is launched, Daiei is expected to issue new shares worth 112 billion yen to be bought by Advantage Partners, Marubeni and IRCJ.
Daiei, once the nation’s largest supermarket chain, sought IRCJ’s help in December to turn around its business, which had deteriorated as a result of aggressive expansion into noncore operations during Japan’s bubble economy in the late 1980s and early 1990s.
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